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NCSHA Washington Report | April 26, 2024

Published on April 26, 2024

NCSHA Washington Report
Beginning under President Trump and expanding through the Biden – Harris Administration, industrial policy has made a surprising comeback as a feature of American domestic and international strategy.

Government support for industries deemed central to national security and economic competitiveness had been seen “as anathema by political and economic leaders in America in recent decades,” but both parties today count among their leaders those who share Senator Rubio’s (R-FL) view that while “the market will always reach the most efficient economic outcome … sometimes the most efficient outcome is at odds with the common good and the national interest.”

In practice, industrial policy often involves “solving multiple problems at once through the same policy intervention,” which the Roosevelt Institute’s Isabel Estevez calls “multi-solving.” For instance, the huge infrastructure law passed in 2021 substantially expanded “buy America” requirements that had long been a staple of federal procurement and transportation projects to a much wider range of industries, including materials and manufactured products related to federally assisted construction.

Including construction of affordable housing: As of today, HOME and the Housing Trust Fund will have to meet the law’s demanding “domestic sourcing” requirements by late August. We’re urging HUD to provide more time and clarity to states to avoid potentially significant administrative burdens and cost increases on affordable housing developments.

Another pillar of President Biden’s industrial (and climate) policy, the $27 billion Greenhouse Gas Reduction Fund, not only imposes demanding environmental targets on funded activities — which the administration hopes will include a lot of affordable homes and apartment developments — it also generally requires wage rates consistent with the Davis – Bacon Act. While the rates are a fact of life in federally financed affordable housing, they tend to drive up project costs, sometimes significantly.

Some proponents of industrial policy get worried when it tries to multi-solve. “The more things you try to achieve, the less likely you are to get them,” according to economist Dani Rodrick, who has studied the topic extensively. New York Times columnist Ezra Klein calls the tendency “everything bagel liberalism.”

“The challenge of the everything-bagel approach to governing is that sometimes, it’s exactly the right thing to do,” Klein writes. “But there is a cost to accumulation. How many goals and standards are too many? And why is subtraction so rare?” 

But liberals aren’t the only fans of everything bagels. The Trump Administration imposed import tariffs to advance its industrial policy, leading to a nine-fold increase in rates for home-building products from China between 2017 and 2021, according to the American Action Forum. The National Association of Home Builders said those moves, along with similar actions on Canadian softwood lumber, amounted to “a tax increase on housing,” adding thousands of dollars to the price of a home.

Whether Trump or Biden wins the White House in November, industrial policy in some form seems here to stay. The impacts on housing construction and affordability could be substantial.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

In This Issue

NCSHA Welcomes New Members
NCSHA welcomed these organizations as Affiliate members in March: Banc of California and ICAST. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

EPA Announces $7 Billion “Solar for All” Grantees
On Monday — Earth Day — the Environmental Protection Agency (EPA) announced 60 selectees under the Greenhouse Gas Reduction Fund’s grant competition to deliver solar energy assistance to more than 900,000 low-income and disadvantaged households. The $7 billion Solar for All grant awards, authorized by the Inflation Reduction Act, will provide funds to states, territories, tribal governments, municipalities, and nonprofits — some working in partnership with state HFAs — to create sustainable programs to install rooftop solar and build community solar facilities that benefit low-income communities and households.

Coons Circulating HOME Funding “Dear Colleague” Letter
Senator Chris Coons (D-DE) is circulating among his Senate colleagues a sign-on letter to appropriators requesting $2.1 billion for the HOME Investment Partnerships program for Fiscal Year 2025. Senators who wish to sign onto the letter expressing support for this level of HOME funding may reach out to Senator Coons’ office directly or use the Senate’s internal Quill system to add their name electronically. Contact Robert Henson with questions.

HUD Publishes Final Rule on Floodplain Management
The U.S. Department of Housing and Urban Development (HUD) on Tuesday published a final rule revising its floodplain management and wetlands protection standards for HUD-assisted or financed properties. The rule is intended to carry out a 2015 executive order President Obama issued to establish a new Federal Flood Risk Management Standard for all federally supported projects to guard against flood loss. For a Federal Housing Administration-insured or HUD-assisted multifamily property, the rule implements a three-tiered process for determining the extent of the property’s floodplain, with a preference for a climate-informed science approach that takes a specialized and holistic view of each property’s individual circumstances. The rule also expands the applicable flood hazard areas for multifamily properties and requires more stringent elevation and flood-proofing standards for properties located in hazard areas.

Newly built single-family homes located in 100-year floodplains will be required to be elevated two feet above base flood elevation to qualify for FHA mortgage insurance. Current FHA policy requires such homes to be built no lower than the base flood elevation. The new single-family standards apply to all homes for which a construction permit is submitted on or after January 1, 2025.

$13 Million Available to PHAs to Help Youth Aging Out of Foster Care
Last week, HUD announced more than $12.7 million for housing assistance to young adults transitioning out of foster care through its Foster Youth to Independence (FYI) Initiative. FYI provides Housing Choice Vouchers to public housing agencies (PHAs), in partnership with public child welfare agencies, to help mitigate the heightened risk of homelessness young adults aging out of foster care experience. The vouchers will be targeted to young adults between 18 and 24 years of age who have left foster care or will leave in the next 90 days and are experiencing or at risk of homelessness. HUD anticipates this round of funding will support grants to 20 PHAs. The deadline to apply is June 17.

Ways and Means Tax Teams to Prepare for 2025 Tax Overhaul
On Wednesday, House Ways and Means Chair Jason Smith (R-MO) announced the establishment of 10 “Tax Teams,” made up of Republican members of the committee, that will each focus on a specific aspect of tax policy to prepare for what is expected to be major tax legislation next year in advance of the expiration of many provisions from the 2017 Tax Cuts and Jobs Act. The Community Development Tax Team, chaired by Representative Mike Kelly (R-PA), will consider issues related to affordable housing. The other members of the team are Representatives Claudia Tenney (R-NY), Darin LaHood (R-IL), Blake Moore (R-UT), and Mike Carey (R-OH). LaHood and Tenney are lead sponsors of the Affordable Housing Credit Improvement Act (H.R. 3238), and all other team members are cosponsors. Kelly is the lead sponsor of the Neighborhood Homes Investment Act (H.R. 3940), and Tenney, LaHood, and Carey are cosponsors.

McCargo Resigns as Ginnie Mae President
Alanna McCargo will step down as president of Ginnie Mae on May 3, HUD announced late last week. McCargo has led Ginnie Mae since December 2021, after serving as senior advisor for housing finance for then-HUD Secretary Marcia Fudge. As Ginnie Mae president and while at HUD, McCargo has worked closely with NCSHA and state HFAs to increase liquidity for affordable housing, expand HFA involvement in Ginnie Mae programs, and support loss mitigation options for struggling homeowners. Under her leadership, Ginnie Mae held a high-level, in-person meeting with HFAs this January to discuss potential Ginnie Mae – HFA partnerships. Ginnie Mae Principal Executive Vice President Sam Valverde will serve as acting president upon McCargo’s departure. NCSHA thanks President McCargo for her strong leadership over the last three-and-a-half years to expand affordable housing options and her deep commitment to working with the HFAs.

NCSHA in the News
Notes from Novogradac, 4.23.24, Harvard JCHS Study Draws Correlation Between Zoning, Rental Deserts and Segregation
Impact Alpha, 4.22.24, Greening down payment assistance to create better homes and better mortgages

Looking Ahead

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • April 30 – May 2 | 2024 Affordable Housing Investors Council Spring Meeting | Milwaukee, WI
    Garth Rieman will speak at this event.
  • May 1, 11:59 pm ET | Entry Deadline | NCSHA’s 2024 Awards for Program Excellence
  • May 1 – 2 | Pennsylvania Housing Finance Agency’s 2024 Housing Forum | Harrisburg, PA
    Jennifer Schwartz will speak at this event.
  • May 1 – 4 | National Association of Local Housing Finance Agencies’ 2024 Annual Conference | Las Vegas, NV
    Robert Henson will speak at this event.
  • May 8 – 9 | Enterprise Housing Credit Investments Convening | Annapolis, MD
    Jennifer Schwartz will speak at this event.
  • May 13 | Early-Bird Discounts End | NCSHA’s Housing Credit Connect & Marketplace | Atlanta
  • June 10 – 13 | NCSHA’s Housing Credit Connect & Marketplace | Atlanta

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